China aims to lay off 5 to 6 million workers from 'zombie' enterprises: Sources

A labourer marking steel bars at a steel and iron factory in Huai'an, Jiangsu province, on Feb 18, 2008.
A labourer marking steel bars at a steel and iron factory in Huai'an, Jiangsu province, on Feb 18, 2008. PHOTO: REUTERS

BEIJING (REUTERS) - China aims to lay off five to six million workers from "zombie enterprises" over the next two to three years as part of efforts to curb industrial overcapacity and pollution, two sources with ties to the country's leadership said.

The government's plans to lay off five million workers in industries suffering from a supply glut would be the country's boldest retrenchment programme in almost two decades, one source said.

The restructuring of state-owned enterprises from 1998 to 2003 led to around 28 million redundancies and cost the central government about 73.1 billion yuan (S$15.69 billion) in resettlement funds.

A second source with leadership ties put the number of layoffs at six million. Both sources requested anonymity because they were not authorised to speak to the media about the politically sensitive subject for fear of sparking social unrest.

The ministry of industry did not immediately respond when asked for comment on the reports.

On Monday (Feb 29), Minister for Human Resources and Social Security Yin Weimin said China expected to lay off 1.8 million workers in the coal and steel industries. But he did not give a timeframe.